Dickstein Shapiro is at the forefront of the energy industry’s renewed commitment to compliance. This commitment to compliance recognizes the Federal Energy Regulatory Commission’s (FERC) recently enhanced enforcement authority and FERC’s expressed intent to be vigilant in investigating and enforcing allegations of improper conduct in competitive electricity and natural gas markets.
Dickstein Shapiro has unsurpassed experience in representing clients in internal and regulatory investigations, and in designing and implementing compliance programs and codes of conduct that conform to industry best practices and that would be favorably viewed under FERC’s Policy Statements on Enforcement, the Principles of Federal Prosecution of Business Organizations, and the federal sentencing guidelines. In recent years, the firm has represented clients in more than a dozen non-public investigations conducted by FERC’s Office of Enforcement, in addition to numerous public investigations. These non-public investigations have generally been closed with no further action or with settlements. Some of these matters have involved dual investigations by and settlements with other federal agencies including the U.S. Department of Justice (DOJ), the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Securities and Exchange Commission (SEC), federal and state prosecutors, and state regulatory authorities. The firm similarly assists clients in conducting internal investigations of compliance matters that arise with respect to energy trading, bidding and scheduling, plant operations, the natural gas “buy-sell” rules, price reporting practices, and the myriad obligations imposed on competitive market participants in tariffs, market rules and FERC regulations and orders. In conducting sensitive internal investigations, the firm assists clients in understanding fully the pertinent facts, in interpreting applicable laws and rules, and in making considered decisions whether and how to self-report potential violations to the FERC, market monitors, and other applicable authorities.
The firm similarly assists clients in conducting internal investigations of compliance matters that arise with respect to energy trading, bidding and scheduling, plant operations, the natural gas “buy-sell” arrangements, “shipper must have title” and “anti-flipping” rules, price reporting practices, and the myriad obligations imposed on competitive market participants in tariffs, market rules, and FERC regulations and orders. In conducting sensitive internal investigations, the firm assists clients in fully understanding the pertinent facts, in interpreting applicable laws and rules, and in making considered decisions whether and how to self-report potential violations to FERC, market monitors, and other applicable authorities.
FERC now expects energy companies to develop and instill a culture of compliance. To that end, the firm also conducts independent assessments of clients’ existing compliance programs, designs and documents revitalized compliance programs, and assists in the formulation of trading and plant operations policies and price reporting procedures. The firm further assists clients in complying with the new compliance requirements imposed by the North American Electric Reliability Corporation (NERC).
The firm’s Energy Practice numbers more than twenty attorneys focusing on electricity and natural gas matters. Many devote substantial portions of their time to compliance matters. The Energy Practice also includes former senior FERC officials who headed FERC investigations into allegations of price manipulation and who helped formulate FERC policy regarding market-based rates. These highly experienced energy industry professionals provide critical insights into navigating FERC enforcement policies. In addition, because FERC investigations often overlap with DOJ, SEC, and CFTC investigations, the firm also utilizes senior attorneys from its securities and litigation practices who focus on these types of compliance and litigation matters.
The importance of a solid internal regulatory compliance program has grown significantly in recent years. The Energy Policy Act of 2005 gave FERC substantial new enforcement authority to address both manipulation of electricity and natural gas markets, and violations of tariffs, market rules and FERC orders. FERC’s Policy Statements on Enforcement encourage adoption and implementation of robust compliance programs as mitigating factors in reducing any penalties for violations. By being in the forefront of energy compliance matters, Dickstein Shapiro is uniquely able to advise and to recommend compliance programs that incorporate “best practices” within the industry.
Energy trading, in particular, can involve complex portfolio management of electricity and gas positions. The firm’s energy trading attorneys and advisors pride themselves on their in-depth understanding of hedging and risk management trading practices. They have considerable experience with complex trading transactions and with assessing voluminous trading data, which is often essential in assessing compliance with market rules and FERC’s anti-manipulation regulations. The firm’s attorneys are also keenly aware of accounting and disclosure issues raised in energy trading, as well as the necessity of compliance with Sarbanes-Oxley, the antitrust laws, and other non-FERC compliance requirements. The firm’s experience and the breadth of its practice has enabled it to assist clients in handling the increasingly complex and visible compliance requirements presented by participation in today’s energy markets.
In advising on compliance matters, the firm’s Energy Practice is thoroughly familiar with RTO- and ISO-specific market rules and market designs. Such an understanding is essential because variations in these rules and designs determine what practices are permitted or prohibited in each of those markets and how internal control procedures must be tailored to each market. Specifically, Dickstein Shapiro has significant experience with respect to market rules and market design for each organized market in the United States today, including the California ISO, Midwest ISO, New York ISO, PJM, and ISO New England, as well as ERCOT.
Investigations and Enforcement
The firm has represented clients in numerous FERC enforcement investigations. Representative engagements are described below:
In these and other matters, the firm assisted in-house compliance personnel and general counsel on self-report considerations and in conducting internal investigations, interviewing trading and operations personnel, preparing and defending depositions, collecting, assessing, and producing voluminous data, preparing narrative responses to data requests, meeting with the FERC enforcement staff, negotiating and drafting settlement agreements, and recommending and implementing corrective measures, including adoption of new compliance programs.
Compliance Programs
The firm has advised and assisted numerous clients in designing and implementing compliance programs that conform to best industry practices and that include the elements of a robust compliance program identified by FERC. See Revised Policy Statement on Enforcement, 123 FERC § 61,156, PP 57-68 (2008). Some representative engagements are provided below:
As of December 1, 2006, comprehensive and complex new Federal Rules of Civil Procedure govern the retention and production of electronic information in the federal courts. Similar rules exist in many states, or are likely to be adopted, and federal agencies (such as the FERC) often look to the federal rules in enforcing their own discovery requirements. The firm has a team of trained and experienced electronic discovery support specialists that assist firm attorneys in advising clients on their electronic information retention policies.